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Cayman Island Government signs up for disclosure

Alden McLaughlin Cayman-450x350

(CNS): The Cayman Islands government announced on Friday evening that it would commit to the Convention on Mutual Administrative Assistance in Tax Matters, further pushing out the boundaries of transparency in the offshore sector. After considerable pressure from the UK government in particular and in the face of growing international pressure for openness, transparency and automatic exchange of information between countries in connection with tax matters and beneficial ownership, Cayman is one of the first overseas territories to follow the crown dependencies in its decision to truly lift the lid on the offshore financial world.

A CIG delegation headed by Premier Alden McLaughlin will go to London on Tuesday at the invitation of David Cameron, the UK prime minister, who is hosting two events prior to the G8 meeting, which is being held in Northern Ireland on 17 and 18 June. ‘Open for Growth’ a meeting being dubbed the three ‘T’s (tax, transparency and trade) will be held on the 15 June as well as another private meeting at Ten Downing Street.

The delegation will include Financial Services Minister Wayne Panton, Finance Minister Marco Archer and Financial Secretary Ken Jefferson.

During the UK visit the Cayman delegation will meet with Mark Simmonds, the FCO minister for the OTs, to address Cayman's budget issues. However, the focus of the trip will be on the Convention on Mutual Administrative Assistance in Tax Matters, which is an OECD-Council of Europe multilateral agreement. This was developed to combat tax evasion and aggressive tax avoidance by promoting cooperation among jurisdictions for the exchange of information among relevant authorities for tax and transparency purposes.

“Cayman has engaged in substantive discussions with HM Treasury on the particulars of the convention,” McLaughlin said. “We are satisfied that the extension of the convention to our Islands will be done in accordance with the UK’s recognition of Cayman’s fiscal autonomy, and the well-established principle that countries have the prerogative to set their own tax rates.”

He said that committing to the convention was in line with Cayman’s extensive network of bilateral exchange of information agreements, such as the US and UK FATCA, the European Union Savings Directive, and the G5 pilot on multilateral automatic information exchange.

“We agree with the UK’s statement that there is ‘no point in dealing with tax evasion in one country, if the problem is simply displaced to another',” McLaughlin said following government’s decision. “With this in mind, we also agree that there should be equitable adherence, including within the G8 countries, to global tax and transparency standards. This will set the foundation for full and effective participation, by all countries, in the true spirit of these efforts.”

McLaughlin said Cameron had acknowledged the UK’s interest in seeing the Overseas Territories and Crown Dependencies flourish.  “This important recognition acknowledges the benefits that international financial centres, like Cayman, contribute to the global economy – including the stimulation of cross-border trade and investment, which grows economies and creates jobs,” added the premier.

Appearing as a guest on Radio Cayman’s Talk Today programme on Friday, McLaughlin said the Cayman government had engaged in lengthy discussion about the tax transparency issues and the technical details since being voted into office last month.

“We have been working through what Cayman’s position should be in relation to this matter and working with Cayman Finance to make sure we take into account what the financial services community think about what is being proposed,” he added. 

There are high expectations around the world that the convention will open doors for governments to track down tax cheats and Cameron has been under considerable pressure himself to ensure that the UK’s territories are all signed up before Britain hosts the G8 summit, where the issue of tax avoidance will be high on the agenda.

“Our position has always been that we want as many jurisdictions as possible to join the multilateral convention, including the Overseas Territories,” the UK Treasury said this week.